NEW LAW TO AID OWNERS TRYING TO SAVE HOMES

Homeowner Bill of Rights takes effect with the New Year

The new year will bring more protections to California homeowners, mainly those who are trying to save their properties from being repossessed.

The Homeowner Bill of Rights, signed by the governor last year, is a set of new laws that puts the onus on banks to help consumers through the foreclosure process. They go into effect today. The legislation, lauded by housing advocates and heavily criticized by the lending industry, forces banks to:

• Stop dual tracking, the process of starting the foreclosure process while a loan modification has been submitted or is being reviewed by the bank. Borrowers in the past have lost their homes to foreclosure as a result of this situation. Under the new law, banks must give loan-modification applicants a response before starting the foreclosure process. Banks also will have to inform consumers who don’t apply for a loan modification that they have the right to do so.

• Assign one point of contact to borrowers who are trying for a loan modification.

One of the laws also allows borrowers to sue loan servicers for violating any foreclosure laws.

Some of the provisions in the package echo those in the national mortgage settlement, a deal struck earlier last year between five major lenders and 49 states, including California. The Homeowner Bill of Rights, though, firms up those provisions into law, which is key because the mortgage settlement terms will end in 2015.

“For too long, struggling homeowners in California have been denied fairness and transparency when dealing with their lending institutions,” said California Attorney General Kamala Harris in a statement. “These laws give homeowners new rights as they work through the foreclosure process and will give Californians a fair opportunity to stay in their homes.”

Homeowner advocates also applauded the legislation.

“Too many Californians have lost their homes despite doing all they can to avoid foreclosure,” said Norma Garcia, senior attorney at Consumers Union, the advocacy branch of Consumer Reports, in a statement. “California’s new law will help more homeowners avoid foreclosure and keep their homes. Ultimately, that will help stabilize California’s housing market and benefit California families, communities and our economy.”

Financial groups including the California Bankers Association and California Mortgage Bankers Association opposed the bill of rights, saying the new regulations will prevent the housing recovery from moving ahead, clog up the foreclosure pipeline and push lending institutions to further tighten their grip on credit to consumers.

“Our industry cannot support legislation that promotes meritless litigation — particularly in an environment where our court system is already overburdened — that will ultimately have no impact on the underlying financial condition of the borrower who cannot afford to stay in their home,” said Rodney K. Brown, president and CEO of the California Bankers Association in an editorial published in the Sacramento Bee in June.

California was a hard-hit area in the foreclosure crisis. More than 900,000 were recorded between 2007 and 2011. More than 61,000 were recorded in San Diego County during that time frame.